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propertylawyer
propertylawyer, Solicitor
Category: Law
Satisfied Customers: 280
Experience:  Property Solicitor with expertise in commercial and residential property transactions.
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I am going to buy a small business on the basis of an asset

Resolved Question:

Hi, I am going to buy a small business on the basis of an asset transfer. I am able to purchase a 'Sale of Business Agreement' online through a firm of lawyers who offer tailor-made online legal documents. Is this risky? Is there anything that I need to know or check before buying this type of service?
Submitted: 1 year ago.
Category: Law
Customer: replied 1 year ago.
There is no property involved in the purchase. Only equipment. goodwill and customer base.
Expert:  propertylawyer replied 1 year ago.

Hi Liz

What exactly are you buying?

What are the assets? Any employees?

If you can give me further details I can help you.

Customer: replied 1 year ago.
Equipment which is hired out for parties and corporate events such as karaoke machines and photobooths. The business is only valued at 31K. There are no employees and no property. We are buying 10k of assets and 21K of goodwill, customer base etc. It is currently trading as a limited company which will be closed. We will then re-open it as a limited company with a new trading name.
Expert:  propertylawyer replied 1 year ago.

There are some things to consider/establish:

-the seller has good title to the assets being sold. You will need to see contracts, receipts and confirmation fully paid for.

- no outstanding HP/finance on on the assets. If there is, can the HP/finance be transferred.

- The contract needs to transfer the business name and the rights to use it, if you intend to use the seller's name.

- The contract needs to transfer the goodwill and contain a non competition clause (prohibit the seller from competing with you in specific locations and for a specified period of time during).

- As the assets are owned by a Ltd company the contract needs to provide for who will be liable if you need to sue for breach of contract, I.e a director. If the Ltd company is wound up you will not be able to claim against the company for breach of contract.

- The contract should contains warranties on the part of the seller (director) in respect of the above points. If the seller breaches any of the warranties you can sue for breach of warranty.

- Contract must state that you are acquiring the assets only, no debts, no employees.

- All assets must be listed on an inventory and attached to the contract.

Although you are only paying 31k it is always recommended to use a solicitor, just to make sure something is not missed.

Do you have any further questions or queries. Happy to assist you further.

Customer: replied 1 year ago.
Thank you. This is very helpful indeed. If the on-line document service is backed up by telephone legal advice from a solicitor do you think that would be sufficient?
Expert:  propertylawyer replied 1 year ago.

Possibly, you could then discuss the contract, the deal and what needs to be put into the contract.

How much us this service if I may ask?

Customer: replied 1 year ago.
It seems very cheap indeed at £24.50 per document. See www.lawdepot.co.uk I'm not sure if there is phone back-up as they have not replied to me yet. Thanks for your help!
Expert:  propertylawyer replied 1 year ago.

I have taken a look at the specimen and it looks very generic. It has terms like corporation and federal which are not usually used in English Law documents.

24.50 is v cheap. Depending on where you live you may find a solicitor who would act for a reasonable fee. It depends if you want to take the risk and use a generic document which may or may not work. At least with a solicitor it should be done correctly, if not you sue them. If you get it wrong it's your 31k on the line.

Expert:  propertylawyer replied 1 year ago.

In my view, use a solicitor. It will cost but it's the safest option.

propertylawyer and other Law Specialists are ready to help you
Customer: replied 1 year ago.
Thank you very much for your help.I will.